Energy Insider: China Intensifies Crackdown on Hyper Competition, Green Electricity Trading Doubles

This week’s Caixin energy wrap covers key developments in China’s energy and climate landscape, focusing on policy shifts, industrial challenges, market reforms, and regulatory actions[para. 1]. The central topics include efforts to counteract destructive industrial competition, the rapid growth of green electricity trading, setbacks in steel industry decarbonization, and government inspections of polysilicon producers.

China’s top economic planner, the National Development and Reform Commission (NDRC), announced a substantial policy aimed at eradicating “involution”—a form of self-destructive, hyper-competitive behavior undermining fair competition in industries like solar and automotive. On August 1, the NDRC presented its intention to standardize government investment promotion, clarify encouraged and prohibited behaviors, and tightly define the role of the state in guiding business practices. Officials highlighted the necessity to combine regulation with market forces to enhance product quality, sustain fair pricing, and improve overall market order. The crackdown aims to prevent price wars and low-quality competition, which harm consumers and impair industry health through declining product standards, poor services, and even counterfeiting[para. 2][para. 3][para. 4][para. 5][para. 6][para. 7][para. 8].

A major development in China’s electricity market is the notable surge in Green Electricity Certificate (GEC) trading. In the first half of 2025, 348 million GECs were traded, more than double the number in the same period of 2024. Of these, 242 million were standalone GECs, while others were associated with green electricity transactions. The total issuance by the National Energy Administration (NEA) included over 1.37 billion GECs, with 958 million being tradable. This reflects China’s shift from a sole focus on renewable generation capacity to a more balanced approach in which both supply and demand are managed by generators. Reforms aim to integrate renewables more deeply into the grid, making both generation and consumption sides responsible for balancing the market, including new mechanisms like virtual power plants and electricity trading[para. 9][para. 10][para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17].

China’s steel industry is at risk of missing its 2025 green target due to an increasing reliance on coal-fired blast furnaces and a stagnation, or decline, in the expansion of electric arc furnaces (EAFs), which are notably lower in emissions. Utilization of blast furnaces rose to 88.6% in the first half of 2025 from 85.9% in 2024, while EAF utilization dropped to 48.6%. Consequently, scrap-based EAF steel made up only 9.8% of total crude steel output—well below the government’s 15% goal for 2025. According to a recent think tank report, missing the target could result in an extra 160 million tons of carbon dioxide emissions. The report calls for reducing coal-based steel output by at least 90 million tons this year to get back on track[para. 18][para. 19][para. 20][para. 21][para. 22][para. 23].

On the regulatory front, more than 40 polysilicon producers—critical to the solar supply chain—are under central government inspection for energy efficiency. The Ministry of Industry and Information Technology (MIIT) inspection, running until the end of September, aims to help China draft an energy-efficiency standard and drive industry consolidation by identifying high-quality production. Major companies such as Xinjiang Daqo New Energy and Sichuan Yongxiang are included. This intervention is part of broader efforts, signaled since June, to address overcapacity in the solar sector, force out outdated production methods, and stabilize prices through central management and sector-wide collaboration[para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35].

In summary, China is intensifying efforts to address destructive competition, promote efficient renewable energy integration, meet climate goals in industrial sectors, and consolidate key industries to ensure a sustainable transition toward its net-zero commitments[para. 1][para. 2][para. 3][para. 4][para. 5][para. 6][para. 7][para. 8][para. 9][para. 10][para. 11][para. 12][para. 13][para. 14][para. 15][para. 16][para. 17][para. 18][para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25][para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34][para. 35].